In construction projects, formal approvals and well-defined timelines are essential for seamless execution. A key document in this process is the Notice to Proceed (NTP), which grants a contractor the official authorization to commence work.
Beyond its administrative function, an NTP establishes contractual obligations, mitigates risks, and aligns project milestones with broader phases such as Front-End Engineering Design (FEED) and Final Investment Decision (FID).
Understanding when and why an NTP is issued—and how it differs from related documents like a Notice of Award or a Letter of Intent—is crucial for project owners, contractors, and stakeholders. In this article, we will have a brief overview of its purpose, legal implications, and best practices in construction projects.
What is a notice to proceed (NTP)?
A Notice to Proceed (NTP) is a formal authorization issued by the project owner, giving the contractor the green light to begin work on a construction project. It is a critical milestone, ensuring that all necessary contractual, financial, and regulatory requirements are in place before any site activities commence.
In large-scale infrastructure and other complex engineering projects, a Notice to Proceed (NTP) typically follows extensive planning and decision-making phases. These include Front-End Loading (FEL) gates, such as Front-End Engineering Design (FEED) and feasibility studies or business cases, as well as the Final Investment Decision (FID). These phases are crucial in determining a project’s technical feasibility, financial viability, and overall risk profile.
A positive FID—which signals full commitment to funding and executing the project—paves the way for the issuance of an NTP by the project owner to the contractor. The NTP marks the official transition from planning to execution, authorizing contractors to mobilize resources, initiate procurement, and commence construction activities.
What is the purpose of the notice to proceed?
An NTP plays a critical role in risk management (i.e. issuance of early warning notices), stakeholder alignment, and legal compliance by Establishing a formal start date. Once issued, the project will typically have a defined baseline program, including key completion dates (e.g., substantial completion, practical completion) and interim milestones, such as site access dates.
Furthermore, the NTP consolidates the program that will serve as a reference point for assessing potential extension-of-time claims due to excusable or non-excusable delays. It provides a contractual basis for evaluating schedule impacts and ensuring that any deviations are managed within the agreed project framework.
When is a Notice to Proceed Issued?
A Notice to Proceed (NTP) is typically issued after the execution of the contract and once all pre-construction conditions have been met. While the specific timing varies by project, an NTP is generally granted when the following key milestones and requirements have been satisfied:
- Completion of FEED (Front-End Engineering Design) or other project approval gates – Ensuring that technical specifications and scope definitions are well established.
- Final Investment Decision (FID) approval – Confirming financial commitment from stakeholders and securing project funding.
- Regulatory and permitting compliance – Obtaining all necessary government approvals, environmental clearances, and construction permits.
- Contractor’s preconditions – Verifying that the contractor has met insurance, bonding, and mobilization requirements.
Once issued, the contractor usually starts to mobilize and commence construction works. However, in some cases, an NTP may authorize limited early works—such as site preparation or procurement—before full-scale construction begins.
The exact timing of the NTP is a critical decision, as issuing it prematurely may introduce risks, while delaying it unnecessarily can lead to project inefficiencies. Therefore, owners and contractors must align on all contractual and logistical considerations before the NTP is granted.
NTP Types
Given the specifics around each project circumstances, NTP may vary in content/format. The table below summarizes some of the most common types of NTPs:
Type of NTP | Description |
Full Notice to Proceed (Full NTP) | Authorizes the contractor to begin all contractual obligations. Issued when all financial, regulatory, and logistical conditions are met. |
Limited Notice to Proceed (LNTP) | Allows specific pre-construction activities (e.g., procurement, site preparation) before full authorization. Used to prevent delays while awaiting final approvals. |
Conditional Notice to Proceed (CNTP) | Issued with conditions that must be met before full work can commence (e.g., permit approvals, financial closure). |
Phased Notice to Proceed | Work authorization is issued in stages, aligning with the project’s phased development to manage risk and financing. |
Emergency Notice to Proceed | Issued for urgent work, such as disaster recovery or critical infrastructure repairs, often bypassing some standard approvals for rapid response. |
Notice to Proceed - Examples
Below you can find some real examples of significant construction and engineering projects, where Owners have issued a formal NTP to contractors:
- Full Notice to Proceed – Copenhagen Infrastructure Partners (CIP) issues Notice to Proceed for the Construction on 240 MW / 960 MWh Battery Energy Storage System in Australia
- Phased Notice to Proceed – Aker receives final NTP for Norfolk Vanguard West and East
Notice to Proceed - Template and Key Points
A Notice to Proceed (NTP) should be clear, precise, and aligned with the contractual framework of the project. While the specific contents may vary depending on the contract type and jurisdiction, an effective NTP typically includes the following key elements:
- Project and Contract Details – A clear reference to the project name, contract number, and the date of contract execution.
- Parties Involved – Identification of the project owner, contractor, and any relevant stakeholders.
- Effective Start Date – The official date from which the contractor is authorized to begin work.
- Project Timeline – Key dates, including the expected completion date and any interim milestones.
- Conditions Precedent – Any prerequisites that must be met before work can commence, such as permits, insurance, or financial securities.
- Scope of Work – A high-level summary of the authorized scope, ensuring alignment with contractual obligations.
- Compliance and Obligations – Reference to key legal, regulatory, and safety requirements that must be adhered to.
- Acknowledgment Requirement – A formal request for the contractor to confirm receipt and acceptance of the terms outlined in the NTP.
Template for NTP
[Project Owner’s Name]
[Owner’s Address]
[City, State, ZIP Code]
[Date]
To: [Contractor’s Name]
[Contractor’s Address]
[City, State, ZIP Code]
Subject: Notice to Proceed – [Project Name]
Dear [Contractor’s Name],
In accordance with clause [x] of the contract dated [Contract Execution Date], you are hereby authorized to proceed with the work for [Project Name]. This Notice to Proceed establishes the Effective Start Date as [Start Date], with a contractual Completion Date set for [Completion Date], with other key milestones including [Specify Milestones, e.g., Site Access Date].
Other KeyTerms:
- Conditions Precedent: The contractor must ensure compliance with all prerequisites, including [e.g., permits, insurance, financial securities], before initiating work.
- Scope of Work: The authorized scope includes [Brief Summary of the Work], as outlined in the contract.
- Compliance and Obligations: The contractor must adhere to [Regulatory Standards, Safety Requirements, and Contractual Conditions] throughout the project.
Please confirm receipt of this notice and acknowledgment of the terms by signing and returning a copy of this document by not later than [date for signature].
If you have any questions or require clarification, please contact [Owner’s Representative] at [Contact Information].
Sincerely,
[Authorized Representative’s Name]
[Title]
[Owner’s company name]
NTP - FAQ
Is a Notice to Proceed Legally Binding?
Yes, a Notice to Proceed is typically legally binding because it is issued under the terms of a signed contract. Once an NTP is issued, the contractor is obligated to perform the agreed scope of work within the specified timeframe. Failure to comply can lead to legal or financial repercussions, including liquidated damages , unnecessary delays and disruptions, or contract termination.
Notice to Proceed vs Notice of Award – What is the difference?
Typically, the Notice of Award (NOA) represents intent, while the Notice to Proceed (NTP) serves as a formal directive to begin work.
The NOA is issued before contract execution and notifies the contractor that they have been selected for the project, often initiating final contract negotiations. However, it does not authorize any physical work. In contrast, the NTP is issued after the contract is signed and officially instructs the contractor to mobilize, procure materials, and commence site activities.
While the NOA signifies selection, the NTP marks the point where contractual obligations take effect, making it a crucial milestone for project execution.
Notice to Proceed vs Letter of intent – What is the difference?
Similarly to the Notice of Award (NOA), the Letter of Intent (LOI) expresses an initial commitment but does not grant full authorization to commence work.
An LOI is typically issued when contract negotiations are still ongoing but both parties intend to formalize an agreement. It allows the contractor to begin preliminary activities—such as mobilization or early procurement—at their own risk (i.e. contractor can start to engage with key supplier and subcontractors, but at its own risk – the client has not liability if, for any reason, the contract is not awarded/signed.)
Notice to proceed and Commencement date – how they relate to each other?
As detailed above, the Notice to Proceed (NTP) marks the point at which a contractor is formally authorized to begin work, while the Commencement Date refers to the contractual start of the project timeline. In many cases, these dates align, but they can also differ based on project-specific factors.
For instance, a conditional NTP may be issued immediately after contract execution, but the commencement date may be delayed due to outstanding permitting, site access constraints, or procurement lead times
Sources
- Construction Notice to Proceed Definition | Law Insider
- Flexible Notice-to-Proceed Provision on the Performance of Transportation Infrastructure Projects
- What is a Notice to Proceed? | Acquisition.GOV
- KY CDBG_6-10_Sample Notice to Proceed.pdf
- HOW EFFECTIVE ARE STANDARD FORM CONSTRUCTION CONTRACTS IN DEALING WITH CONTRACT VARIATIONS AND CONTRACTORS’ CLAIMS
Disclaimer: The articles on this blog are for informational and educational purposes only and do not constitute legal advice. While we strive to provide accurate and up-to-date information on construction law, regulations may vary by jurisdiction, and legal interpretations can change over time.
